What appears to be happening is that investors are picking between winners and losers, as opposed to herding into the index or tech stocks as a whole. That’s probably healthy if you are worried that AI spending is creating a bubble in tech stocks.
Thus far, the capital expenditure and the revenue is real: it’s hitting the top and bottom lines of Alphabet and Nvidia, and that’s why valuations for those companies are so healthy. “The charge is led by well-established Big Tech companies with multiple revenue streams, who are paying for their investment in data centers mostly out of free cash flow and from which they are generating immediate returns from enterprise customers,” Cox and Abrudan wrote.
“We think that reports of a bubble are exaggerated (for now),” they said.
Elsewhere: Asian markets were down today but markets in Europe largely rose in early trading. The STOXX Europe 600 was up 0.63% at the time of writing; The U.K.’s FTSE 100 was up 0.74%.
Here’s a snapshot of the markets ahead of the opening bell in New York this morning:
